Local developer Halakar Properties Inc. has put the Illinois Building under contract, and has been meeting with city officials about a tax abatement that could help return retail space to the first floor and turn the upper floors into apartments, industry observers said.
The company, which developed the 3 Mass condo and retail project, has been talking with potential development partners for the Illinois Building. No cost or time line for the project was available.
To win tax abatement, the project would have to bring jobs with it, possibly in the form of new office tenants, Planning Director Maury Plambeck said. That could be a tough standard to meet for the Illinois Building, since most in the industry believe apartments make the most sense for the property.
The 1925 building at the southeast corner of Illinois and Market streets has generated plenty of interest among potential tenants in recent years, including the steakhouse Smith and Wollensky. But the building, which last housed a food court and a gym, has been vacant since 2003 thanks in large part to a legal battle between the owners of the building itself and separate owners that control the land underneath.
The building is owned by an affiliate of locally based HDG Mansur, but ownership of the land it sits on is more complicated. Eleven heirs of one of three original landowners still hold an interest in the property. The building owners hold a 99-year land lease, signed in 1919, that stipulates any improvements on the property revert to the landowners when the lease expires in 2018.
The risk that any investment in the building could be lost to the landowners has prevented development, and led to the designation of the property as one of the state's 10 most at risk of demolition by the Historic Landmarks Foundation of Indiana. The Halakar contract would bring the parties in that dispute together.
Company President Todd Maurer declined to discuss the building or confirm the company has a contract to buy it. (Maurer is a son of Michael Maurer, co-owner of IBJ Media.)
The building is one of several on or near Monument Circle designed by Rubush and Hunter, one of the city's top architectural firms in the early 20th century. Other prominent Rubush and Hunter buildings include the Columbia Club and the Circle Tower.
The city would cheer a new use for the Illinois Building, both for saving the historic building and for bringing new life to downtown, Plambeck said.
"It certainly is a good example of the types of buildings that were predominant early in the last century, promoting walkability, with storefronts on the sidewalk, lots of character," he said. "Hopefully, it can be rehabbed and reused."
Across the street, the old Block's department store has retail on the first floor and loft apartments dubbed The Block upstairs.
Halakar has not yet filed a formal plan or an application for incentives for the Illinois Building.
Bringing life to the building's first floor would be the easy part; the other nine floors get tricky, said Terry Sweeney, director of real estate for Indianapolis Downtown Inc.
The problem: the building's lack of parking. But the potential in the location could outweigh any setbacks.
"It's just a key corner that helps link the Circle Centre area with a lot of the downtown corporate offices," Sweeney said. "It's a great location and will be an important anchor for the area, but the actual redevelopment won't be the easiest thing to navigate."
Signs of life at the Illinois Building also could help drive more traffic to some of the new restaurants, including the Tea Cozy and Tata Cuban Cafe, that have sprung up along Market Street between Monument Circle and the Statehouse.
"This whole little corner here has really started to pick up," said Jeff Sweet, general manager of the Indianapolis Hilton, which sits along Market Street, opposite the building.
The hotel would benefit from more restaurants or street-level retail and also from having a spruced-up historic building nearby, he said.